Michelin Group's acquisition of FCG brings opportunities to the specialty tire division

June 27 news, recently, Michelin and French private equity firm IDI issued a joint announcement. According to the announcement, Michelin plans to fully acquire the stake in Flex Composite Group(FCG), a high-tech engineering fabric and film manufacturer, for 700 million euros.

The acquisition is seen as an important step in Michelin's "Leading the Line 2030 Strategy" plan and will also make Michelin and FCG leaders in the field of high-tech engineered fabrics and films. Michelin will leverage its sustainable innovation capabilities and FCG's expertise in customer relations and production processes to expand its polymer composites business, which is critical to Michelin's development in related fields. The transaction is expected to bring innovative synergies across a wide range of products and applications and further improve FCG's environmental impact during production and operations.

In addition, the acquisition is expected to increase Michelin's high-tech materials revenue by approximately 20%, and accelerate the business's growth. For Michelin Group and its specialty tire division, this transaction will bring an increase in EBITDA and will also have a positive impact on cash appreciation and earnings per share. The transaction is expected to close in the third quarter of 2023 and Michelin's financial position will continue to remain strong after the transaction is completed.

Florent, CEO of Michelin Group Dr. Menegaux said: "We are very pleased that the FCG team has joined the Michelin Group to jointly build a leader in the field of high-tech engineered fabrics and films. This cooperation will fully integrate the strengths of the two companies, especially their common expertise in polymer composite solutions. Our goal is to expand the boundaries of technological innovation in a variety of new products and application areas through synergy. Michelin is strategically positioned to become an important player in polymer composite solutions outside the mobile mobility sector, and this acquisition is an important milestone in achieving this strategic goal."

It is understood that FCG is a leading company in the field of engineered fabrics and films in Europe, and its products are mainly used in high-tech markets such as ships, supercars, electric vehicles, sports and construction. FCG has a wide range of polymer composite solutions, which are closely related to solutions already developed by Michelin. The company currently operates in Europe with 400 employees and is committed to meeting the needs of mid-to-high-end customers in fast-growing markets. According to data released by FCG, its revenue in 2022 will be 202 million euros. Between 2015 and 2022, the company's average organic growth rate is 11%, and its profit before tax, interest, depreciation and amortization is 25% to 30%.

Through this acquisition, Michelin is expected to further expand its influence in the field of high-tech engineered fabrics and films, accelerate the growth of its high-tech materials business, and achieve its strategic goals. This is an important strategic move for the Michelin Group and will also have a positive impact on its continued development.